Full opinion text
GRAVEN, District Judge. The plaintiff, Hoosier Casualty Company, is an Indiana insurance corporation which, among other insurance, writes automobile insurance. On June 19, 1950, at Marshall-town,-.Iowa, it issued and delivered to the defendant Wayne R. Fox a policy covering an automobile owned by him. The coverage related, in part, to bodily injury liability, property damage liability, and medical payments arising out of the operation of the automobile. The policy limits, as to bodily injury liability, were $20,000 per person and $70,000 per accident. The policy was for a term expiring June 19, 1951. On January 28, -1951, the automobile was involved in a mishap near Beacon, Iowa. At the time it was being operated by the defendant Wayne R. Fox. Riding with him at the time were the defendant Joe Zieons, the defendant Ralph Eakins, and Gerald E. Kriegel. The last name of the defendant Ralph Eakins is incorrectly given in the complaint and in some of the. other pleadings as Ailcens. As a result of the- mishap Gerald E. Kriegel and the defendants Joe Zieons and Ralph Eakins sustained serious injuries. Gerald E. Kriegel died as a result of his injuries. The defendant Betty Kriegel Williamson was by the District Court of Iowa appointed administratrix of his estate. The defendants Wayne R. Fox, Joe Zieons, Ralph Eakins-, and Betty Kriegel Williamson, administratrix, are and were residents and citizens of the State of Iowa. Gerald E. Kriegel at the time of the mishap -and at the time of his death w-as a resident of the State of Iowa. On September 21, 1951, the plaintiff, Hoosier Casualty Company, brought this action in this court asking for a declaratory judgment under the provisions of the Federal Declaratory Judgments Act, 28 U.S.C.A., §§ 2201, 2202. It named and joined as parties defendant Wayne R. Fox, Joe Zieons, Ralph Eakins, and Betty Kriegel Williamson, administratrix. Jurisdiction is based upon diversity of citzenship between the plaintiff and all of the defendants. It is not controverted that the situation of Joe Zieons, Ralph Eakins and Gerald E. Kriegel at the time of the mishap was such as to give them the status of guests under the so-called Iowa Guest Statute. That statute, which appears as Sec. 321.494, Code of Iowa, 1950, I.C.A., provides as follows: "The owner or operator of a motor vehicle shall not be liable for any damages to any passenger or person riding in said motor vehicle as a guest or by invitation and not for hire unless damage is caused as a result of the driver of said motor vehicle being under the influence of intoxicating liquor or because of the reckless operation by him of such motor vehicle.” In its complaint the plaintiff alleges that the defendant Wayne R. Fox had procured the issuance of the automobile insurance policy by means of fraudulent statements and representations. It asks that it be declared that it is under no liability thereunder to any of the defendants. The defendant Wayne R. Fox filed an answer denying fraud on his part and asking in effect that it be held that the policy is enforceable according to its terms. The defendants Joe Zieons and Ralph Eakins filed answers setting up a number of defenses, certain of which will be referred to later. In addition, both of'them filed counterclaims against the plaintiff. In their counterclaims they allege that Wayne R. Fox had been guilty of recklessness in the operation of his automobile within the purview of the Iowa Guest Statute. They ask recovery of the plaintiff for the damages sustained by them because of such recklessness on the part of Wayne R. Fox. They both also filed cross-claims against Wayne R. Fox on the same claims. The amount of damages claimed by the defendant Joe Zieons on his claim is the sum of $11,402.40. The amount of damages claimed by the defendant Ralph Eakins on his claim is the sum of $16,660. The defendant Betty Kriegel Williamson filed an answer in some respects similiar to the answers oif the defendants Joe Zieons and Ralph Eakins. However, she did not and has not filed any counterclaim or cross-claim herein for damages for the death of Gerald E. Kriegel. As yet she has not brought any action on her claim. It appears that her claim would be in a very substantial amount. No action is pending in any other court involving the claims of the defendants Joe Zieons and Ralph Eakins. The applicable Iowa -Statute of Limitations as to the claims of the defendants Joe Zieons, Ralph Eakins and Betty Kriegel Williamson, administratrix, is two years. Sec. 614.1(3), Code of I-owa, 1950, I.C.A. Subsequently, Pear! McMurry, Commissioner of Public Safety of Iowa, made application to intervene and file answer herein. That feature will be referred to later. The plaintiff challenges the right of the defendants Joe Zieons and Ralph Eakins to counterclaim against it on the policy for the damages sustained by them because of the claimed recklessness of the defendant Wayne R. Fox. The defendant Wayne R. Fox challenges the right of the defendants Joe Zieons and Ralph Eakins to assert their cross-claims against him. in this action. The plaintiff also challenges the sufficiency of certain of the defenses asserted in the answers of the defendants Wayne R. Fox,, Joe Zieons, Ralph Eakins, and Pearl Mc-Murry, Commissioner of Public Safety of Iowa. In the present case there is presented the situation where an insurer seeks a declaration of non-liability on an automobile policy issued by it because of fraud on the part of the insured in its procurement and in which there have been joined as parties defendant, the insured, two persons injured by the alleged recklessness of the insured, and the personal representative of another person allegedly similarly injured, and in which the two living injured persons file counterclaims against the insurer and cross-claims against the insured for the damages sustained by them 'because of such alleged recklessness. The policy in question contains the following provision in regard to coverage: “Coverage 1 — Bodily Injury Liability “To pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of bodily injury, sickness or disease, including death at any time resulting therefrom, sustained by any person, caused by accident and arising out of the ownership, maintenance or use of the automobile.” It also contains a provision providing that the insurer shall defend any -suit against the insured alleging bodily injury as a result of the use of the automobile and seeking damages on account thereof. The policy also contains the following provision: ■ “No action shall lie against the company unless, as a condition precedent thereto, the insured shall have fully complied with all the terms of this policy, nor until the amount of the insured’s obligation to pay shall have been finally determined either by judgment against the insured after actual trial or by written agreement of the insured, the claimant and the company. "Any person or organization or the legal representative thereof who has secured such judgment or written agreement shall thereafter be entitled to recover under this policy to the extent of the ¡insurance afforded by this policy. Nothing contained in this policy shall give any person or organization any right to join the company as a co-defendant in any action against the insured to determine the insured’s liability. "Bankruptcy or insolvency of the insured or of the insured’s estate shall not relieve the company of any of its obligations hereunder.’’ Jurisdiction in this case being based' upon diversity of citizenship, the doctrine of the case of Erie Railroad Company v. Tompkins, 1938, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188, 114 A.L.R. 1487, is governing. The Iowa Code contains and for a long period has contained many statutes relating to. the right of insurance companies to do business in this State, the type and kind of policies they may issue and as to rights and obligations thereunder. The present statutory provisions relating thereto are found in Title XX of the Code of Iowa, 1950, 1.C. A. § 516.1 et seq. Sec. 516.1 of that title provides as follows: “All policies insuring the legal liability of the insured, issued in this state by any company, association or reciprocal exchange shall, notwithstanding any other.provision of the statutes, contain a provision providing that, in event an execution on a judgment against the insured be returned unsatisfied in an action by a person who is injured or whose property is damaged, the judgment creditor shall have a right of action against the insurer to the same extent that such insured could have enforced his claim against such insurer had such insured paid such judgment.’’ Chapter 516, and especially Sec.. 516.1, has been considered by the Iowa Supreme Court in several cases. The provisions of that Section are not to be thwarted by policy provisions. Schmid v. Automobile Underwriters, 1932, 215 Iowa 170, 244 N.W. 729, 733, 85 A.L.R. 4. A person injured by the wrongful act of the insured is entitled to the benefits of that Section but he is also bound by its limitations. Ellis v. Bruce, 1932, 215 Iowa 308, 245 N.W. 320, 324. The policy in question comes within the scope of that Section. Under the provisions of that Section the injured person may not join the insured and his insurer. Ellis v. Bruce, supra. Under the provisions of that Section the recovery of a judgment and the return of execution unsatisfied are conditions precedent to the maintenance of an action by such injured person against the tort-feasor’s insurer and until such conditions have been met such injured person has no rights against such insurer. McCann v. Iowa Mut. Liability Ins. Co., 1942, 231 Iowa 509, 1 N.W.2d 682, 689; Ellis v. Bruce, supra; See also International Indemnity Co. v. Steil, 8 Cir., 1929, 30 F.2d 654, 655 passing upon the same Section. It seems that the Iowa Supreme Court regards the matter of permitting or not permitting an injured person to bring a direct suit against the tort-feasor’s insurer as being a matter of substantive law. Eggermont v. Central Surety & Insurance Corp., 1945, 236 Iowa 197, 17 N.W.2d 840. The matter of an injured person joining the insured tort-feasor and his insurer is closely intertwined with and related to the question of the maintenance of a direct action against the tort-feasor’s insurer. On the matter of a direct suit against the insurer, see Annotations 85 A.L.R. 20, 106 A.L.R. 516. On the matter of joinder, see Annotations 7 A.L.R. 1003, 96 A.L.R. 356. The new Iowa Rules of Civil Procedure, Code of Iowa, 1950, pp. 2339-2388, became effective July 4, 1943, 58 I.C.A. Those rules have the force and effect of statute. Hubbard v. Marsh, 1948, 239 Iowa 472, 32 N.W.2d 67, 68; Glatstein v. Grund, Iowa, 1952, 51 N.W.2d 162. Prior to their adoption the right of joinder of parties, remedies and caúses of action was rather restricted. In a number of cases decided during that period relating to joinder by an injured person of the tort-feasor and his insurer, stress was placed upon the existing rules of procedure as to joinder. The new Iowa Rules of Civil Procedure greatly liberalized the existing rules as to joinder. Rule 28 of the new rules contains the following liberalized provision: “An action heretofore cognizable only after another has been prosecuted to conclusion may be joined with the latter * * Rule 28 was adopted with a background of declared State policy and rules against direct suits by an injured person against the tort-feasor’s insurer and against the joinder of the insured and his insurer. If Rule 28 had not contained any other provision than the provision just set forth, it might have been claimed that it constituted a change in such policy and rules. However, Rule 28 contains the following prohibitory provision: “But there shall be no joinder of an action against an indemnitor or insurer with one against the indemnified party, unless a statute so provides.” Rule 28 is taken from Rule 18 of the Federal Rules of Civil Procedure, 28 U.S.C.A., but the Federal rule, unlike the Iowa rule, does not contain the prohibition just referred to. See Cook, Iowa Rules of Civil Procedure, annotated, pp. 83, 84, and 36 Iowa Law Review 120. It would seem that the prohibition inserted in Iowa Rule 28 was indicative of State intent that its established policy and rule in regard to direct actions by an injured person against a tortfeasor’s insurer was not to be changed because of a liberalized rule of procedure, and that-Rule 28 was to be integrated into and made consistent with such established policy and rule. In the present case the two injured persons referred to have by their counterclaims brought direct actions against the insurer of the alleged tort-feasor and such actions have been joined with actions against the alleged tort-feasor. -Such direct'actions and joinder are contrary to the policy of the State of Iowa as declared by statute and a State rule of procedure having the effect of statute. Under the State statute the recovery of a judgment against the alleged tortfeasor and the return of execution thereon unsatisfied are conditions precedent to the maintenance of such direct actions. The Federal Rules of Civil Procedure, adopted in 1938, greatly liberalized the federal practice as to joinder of parties, claims, and remedies and as to counterclaims and cross-claims. In the case of United States Fidelity & Guaranty Co. v. Janich, D.C. Cal. 1943, 3 F.R.D. 16, in a situation similar to that in the present case, it was held that under the Federal Rules of Civil Procedure an injured person could counterclaim against his tortfeasor’s insurer, as the two living injured persons are attempting to do in this case. See 3 Moore’s Federal Practice Par. 13.34, p. 93 (2d Ed. 1948). It had been assumed by many members of the bench and bar that the adoption of the Federal Rules of Procedure would result in uniformity in the procedure of the federal courts sitting in the different states in both diversity and non-diversity cases. However, not long prior to their adoption a Mr. Tompkins took a walk along the right of way of the Erie Railroad Company and was hit by a car door, projecting from a moving train. The mishap threw him into legal immortality and the law into a state of uncertainty, and, - as it later developed, inflicted a serious pre-natal injury on 'the Federal Rules of Civil Procedure, then in a state of en ventre sa mere. Shortly prior to the adoption of the Federal Rules of Civil Procedure the United States Supreme Court handed down its decision in the case of Erie Railroad Company v. Tompkins, supra. While perhaps not fully realized at the time, the doctrine of that decision was to impair uniformity in federal procedure in diversity litigation. Federal trial courts sitting in cases where jurisdiction is based upon diversity o>f citizenship have hovering over them the “brooding omnipresence" of the Erie case. See Clark, State Law in The Federal Courts: The Brooding Omnipresence of Erie v. Tompkins, 55 Yale Law Journal 267,269 (1946). The scope and effect of the doctrine of the Erie case in diversity litigation has been considered by the United States Supreme Court in a number of cases. Ruhlin v. New York Life Insurance Co., 1938, 304 U.S. 202, 58 S.Ct. 860, 82 L.Ed. 1290; Cities Service Oil Co. v. Dunlap, 1939, 308 U.S. 208, 60 S.Ct. 201, 84 L.Ed. 196; Klaxon Co. v. Stentor Electric Mfg. Co., 1941, 313 U.S. 487, 61 S.Ct. 1020, 85 L.Ed. 1477; Guaranty Trust Co. of New York v. York, 1945, 326 U.S. 99, 65 S.Ct. 1464, 89 L.Ed. 2079, 160 A.L.R. 1231; Angel v. Bullington, 1947, 330 U.S. 183, 67 S.Ct. 657, 91 L.Ed. 382; Woods v. Interstate Realty Co., 1949, 337 U.S. 535, 69 S.Ct. 1235, 93 L.Ed. 1524; Palmer v. Hoffman, 1943, 318 U.S. 109, 63 S.Ct. 477, 87 L.Ed. 645, 144 A.L.R. 719; Ragan v. Merchants Transfer & Warehouse Co., 1949, 337 U.S. 530, 69 S.Ct. 1233, 93 L.Ed. 1520; Cohen v. Beneficial Industrial Loan Corp., 1949, 337 U.S. 541, 69 S.Ct. 1221, 93 L.Ed. 1528. In the last three cases cited it was held that the doctrine of the Erie case required that the state law should govern as to matters which were specifically covered by the Federal Rules. The question as to whether the right of an injured person to maintain a direct action against a tort-feasor’s insurer is a matter of substance or procedure has arisen most frequently in connection with cases involving conflict of laws. As to conflict of laws as to the right of an injured person to maintain a direct action against the tortfeasor’s insurer, see Annotation 16 A.L.R.2d 881; recent case comment on Anderson v. State Farm Mut. Automobile Ins. Co., 1946, 222 Minn. 428, 24 N.W.2d 836, in 31 Minnesota Law Review 492 (1947); Kertson v. Johnson, 1932, 185 Minn. 591, 242 N.W. 329, 85 A.L.R. 1; Lieberthal v. Glens Falls Indemnity Co., 1946, 316 Mich. 37, 24 N.W.2d 547; and Conflict of Laws in Automobile Insurance, by John P. Faude, p. 88, Proceedings of Section of Insurance Law of American Bar Association for 1950. As heretofore noted the Iowa Supreme Court apparently regards the matter of the right to maintain such suits as being one of substantive law. However, the present case is not a conflict of laws case, but is one having to do with the doctrine of the Erie case. In the case of Guaranty Trust Co. of New York v. York, supra, the Court stated, at page 109 of 326 U.S., at page 1470 of 65 S.Ct., that in applying the rule of the Erie case state court opinions characterizing certain matters as being substantive or procedural were immaterial. As to some of the problems presented by attempting to apply the “substantive-procedure test” in cases governed by the Erie case, see Tunks, Categorization and Federalism: “Substance” and “Procedure” After Erie Railroad v. Tompkins, 34 Illinois Law Review 271 (1939). It is the rationale of the decisions of the United States Supreme Court that á federal court in cases in which jurisdiction is based upon diversity of citizenship enforces state law and state policy. Angel v. Bullington, supra; Martineau v. City of St. Paul, 8 Cir., 1949, 172 F.2d 777, 780. It is also the rationale of such decisions that provisions of the Federal Rules of Civil Procedure must in such cases give way to such law and policy. Further, it is the rule that if a party could not have maintained a certain action in the local state court he cannot maintain such action in federal court in an action in which jurisdiction is based upon diversity of citizenship. Woods v. Interstate Realty Co., supra. It has been and is the Iowa policy and rule that an injured person may not join an action against a tort-feasor with one against his insurer. It also has been the long-standing Iowa policy declared by statute that such injured person cannot maintain a direct action against such insurer until he has met the conditions precedent of recovery of a judgment against the tortfeasor and the return of execution unsatisfied. To permit the two living injured persons in the present case to proceed as they have attempted to do, upon the ground that the Federal Rules of Civil Procedure permit them to do so, would be to permit such parties by means of such Rules to contravene state policy and state law. It seems clear that the United States Supreme Court would not permit that to be done. Cases involving the matter of' the effect of the doctrine of the Erie case in diversity litigation on the joinder of an insured tortfeasor and his insurer under the Federal Rules of Civil Procedure have not been numerous. In the cases of Jennings v. Beach D.C.Mass.1940, 1 F.R.D. 442, and Pitcairn v. Rumsey, D.C.Mich.1940, 32 F. Supp. 146, it was held that where a state statute prohibited the joinder of the insured and the insurer, such joinder would not be permitted in federal court actions based upon diversity of citizenship. See also Jones v. U. S. Fidelity & Guaranty Co., D.C.Fla.1937, 19 F.Supp. 799. Compare Ford v. Glens Falls Indemnity Co., D.C.S.C. 1948, 80 F.Supp. 347, and Behling v. Rivers, D.C.S.C.1946, 74 F.Supp. 350. See 3 Moore’s Federal Practice, Par. 18.08, p. 1826 (2d Ed. 1948). In the case of United States Fidelity & Guaranty Co. v. Janich, D.C.Cal.1943, 3 F.R.D. 16, heretofore referred to, in which a direct action by an injured person against the tort-feasor’s insurer in a declaratory judgment action was allowed, the court had under consideration the effect of a “No action” clause in the policy and not a state statute, and it is indicated that the holding was in accord with the local state law. In the present case the defendants Joe Zieons and Ralph Eakins are attempting, as against the plaintiff,, to obtain the benefit of an Iowa statute and at the same time to reject its limitations. Such is contrary to Iowa law. Ellis v. Bruce, supra. It is the holding of the Court that the defendants Joe Zieons and Ralph Eakins may not in this proceeding maintain their counterclaims against the plaintiff, Hoosier Casualty Company. There is next to be considered the jurisdictional status of the cross-claims filed 'by the defendants Joe Zieons and Ralph Eakins against the defendant Wayne R. Fox, the alleged tort-feasor. There is diversity of citizenship between the plaintiff and all of the defendants, but there is no diversity of citizenship between the defendants Joe Zieons and Ralph Eakins, on the one hand, and the defendant Wayne R. Fox, on the other hand. The defendant Wayne R. Fox has moved to dismiss those cross-claims against him for lack of federal court jurisdiction. In the present case there is presented the situation where an insurer brings an action for a declaration of non-liability oh an automobile insurance policy, joining as parties defendant the insured and the persons allegedly injured by the insured, and where two of the persons injured file cross-claims against the insured for such injuries, and where there is diversity of citizenship as between the insurer and all of the other parties but such diversity is lacking as between the insured and the injured persons. The question is whether .federal court jurisdiction exists as to the cross-claims. The Federal Declaratory Judgments Act, 28 U.S.C.A. §§ 2201 and 2202, received Presidential approval on June 14, 1934. The Act contains no provisions as to parties. It is authoritatively settled that where an insurance company asks for a declaration of non-liability or non-coverage on a policy similar to the one in question that injured persons having the same status as the claimants herein are proper .parties defendant. See Maryland Cas. Co. v. Pacific Coal & Oil Co., 1941, 312 U.S. 270, 61 S.Ct. 510, 85 L.Ed. 826. Such injured parties are proper parties defendant even though their claims against the insurer are contingent upon the recovery of a judgment against the insured. Franklin Life Insurance Co. v. Johnson, 10 Cir., 1946, 157 F.2d 653, 658. However, an injured person who has not obtained judgment is not a necessary party. Western Casualty & Surety Co. v. Beverforden, 8 Cir., 1937, 93 F.2d 166, 168. Thus, it appears that while the defendants Joe Zieons, Ralph Eakins and Betty Kriegel Williamson, Administratrix, are proper parties to the action, they were not necessary parties. The recovery of a judgment by an injured person either for or against the insured is not necessarily res judicata as to the liability of his insurer. See McCann v. Iowa Mut. Liability Ins. Co., 1942, 231 Iowa 509, 1 N.W.2d 682 and Stoll v. Hawkeye Casualty Co., 8 Cir., 1952, 193 F.2d 255. However, the fact that a certain person is a proper party defendant in a federal court action does not of itself give such court jurisdiction of claims that he may have against other parties to the action. Pettyjohn v. Pettyjohn, 8 Cir., 1951, 192 F.2d 322. The requisite jurisdictional amount is involved in the cross-claims of the defendants Joe Zieons and Ralph Eakins against the defendant Wayne R. Fox. However, diversity of citizenship being lacking, if those claimants had originally brought actions against Wayne R. Fox on them in this Court they would have been dismissed for lack of jurisdiction. It is the claim of those claimants that because they are asserting their claims by way of cross-claims in this action their claims are of federal court cognizance. The Federal Declaratory Judgments Act itself contains no provisions in regard to the matter of jurisdiction. It is authoritatively settled that the Act merely enlarges the range of remedies available in the federal courts and does not extend their jurisdiction. Skelly Oil Co. v. Phillips Petroleum Co., 1950, 339 U.S. 667, 70 S.Ct. 876, 94 L.Ed. 1194; Home Ins. Co. v. Trotter, 8 Cir., 1942, 130 F.2d 800, 803. The Act only provides a remedy where federal court jurisdiction already exists. California Ass’n of Employers v. Building & Constr. Trades Council, 9 Cir., 1949, 178 F.2d 175, 177. In the case of Clark v. Memolo, 1949, 85 U.S.App.D.C. 65, 174 F.2d 978, 980, the Court states .“It is well settled that the Declaratory Judgment Act does not confer or extend jurisdiction over an area not already covered, nor can it be used to give relief indirectly which could not be given directly.” It has been frequently stated that the Act should not be used to drag into the federal courts the litigation of claims between citizens of the same states. Maryland Casualty Co. v. Boyle Constr. Co., 4 Cir., 1941, 123 F.2d 558, 565-566; Indemnity Ins. Co. v. Schriefer, 4 Cir., 1944, 142 F.2d 851, 854; Pennsylvania Casualty Co. v. Thornton, D. C.Ala. 1945, 61 F.Supp. 753, 756. See also, Indemnity Ins. Co. v. Kellas, 1 Cir., 1949, 173 F.2d 120, 128. The Federal Declaratory Judgments Act itself contains no provisions as to the matter of pleading and practice thereunder. However, Rule 57 of the Federal Rules of Civil Procedure makes those rules applicable to declaratory judgment actions. Home Ins. Co. of New York v. Trotter, 8 Cir., 1942, 130 F.2d 800, 804. Rule 82 of those Rules provides that they shall not be construed to extend or limit the jurisdiction of federal courts. It is the claim of the defendants Joe Zieons and Ralph Eakins that in the present case their cross-claims are of federal court cognizance under the ancillary jurisdiction of this Court. The federal courts have always deemed that their statutory jurisdiction is implemented by an ancillary jurisdiction lacking express statutory authorization. Such jurisdiction is based upon the theory that such ancillary jurisdiction is essential to the independence and self-sufficiency of the federal courts. For an excellent discussion of these matters, see Silberg, Ancillary Jurisdiction In The Federal Courts, 12 J.Air L. 288 (1941), quoted in Forrester, Federal Jurisdiction and Procedure (1950) p. 291. Examples of the earlier exercise of ancillary jurisdiction are found in Brun v. Mann, 8 Cir., 1906, 151 F. 145, 150; Loy v. Alston, 8 Cir., 1909, 172 F. 90, 94-95. Prior to the adoption of the Federal Rules of Civil Procedure the federal courts tended to regard their ancillary jurisdiction as being somewhat limited in scope and inelastic in character. See, e. g., Campbell v. Golden Cycle Mining Co., 8 Cir., 1905, 141 F. 610. See also Forrester, supra, p. 297. The courts have never favored the piecemeal disposition of litigation. Prior to the adoption of the Federal Rules of Civil Procedure the existing procedure tended to be restrictive as to the inclusion of parties and claims in one action. Therefore, the matter of piecemeal disposition of litigation arose rather infrequently. Following the adoption of the Federal Rules of Civil Procedure, with their liberal provisions as to joinder of parties and claims, the federal courts in many cases found themselves confronted with numerous parties who were asserting various and conflicting claims. Such situations caused the matter of the piecemeal disposition of litigation to become one of pressing and practical importance. With numerous parties and numerous claims being immediately before courts in the same action there was the natural wish and desire on the part of such courts to' dispose of the entire litigation in the same proceeding. Because of such situations and such desire, the federal courts have, since the adoption of the Federal Rules of Civil Procedure, frequently examined and re-examined the scope and extent of their ancillary jurisdiction. Such examination and re-examination disclosed to many of such courts that their ancillary jurisdiction was much broader and much more elastic than it had previously been understood to be. Such disclosure fitted in very pleasingly with the policy of the courts against the piecemeal disposition of litigation. In some cases where an apparently broad scope was given to the ancillary jurisdiction of federal courts, the undesirability of piecemeal disposition of litigation was given considerable stress. See, e. g., United States Fidelity & Guaranty Co. v. Janich, D.C.Cal. 1943, 3 F.R.D. 16, 18. While, as heretofore noted, the Federal Rules of Civil Procedure expressly provide that they are not to be construed as extending federal court jurisdiction, it seems evident that a number of those Rules have been especially productive of questions having to do with the nature and extent of the ancillary jurisdiction of the federal courts. Such of those Rules as seem to be pertinent to the consideration of the jurisdictional question presented in the instant case will next be considered. Rule 13(g) under which the cross-claims in question were filed provides as follows: ‘‘Cross-Claim Against Co-Party. A pleading may state as a cross-claim any claim by one party against a co-party arising out of the transaction or occurrence that is the subject matter either of the original action or of a counterclaim therein or relating to any property that is the subject matter of the original action. Such cross-claim may include a claim that the party against whom it is asserted is or may be liable to the cross-claimant for all or part of a claim asserted in the action against the cross-claimant.” Rule 13 also contains provisions in regard to compulsory and permissive counterclaims, the relevancy of which will be later referred to. Rule 13(a) provides in part as follows: “Compulsory Counterclaims. A pleading shall state as a counterclaim any claim which at the time of serving the pleading the pleader has against any opposing party, if it arises out of the transaction or occurrence that is the subject matter of the opposing party’s claim * * Rule 13(b) provides as follows: “Permissive Counterclaims. A pleading may state as a counterclaim any claim against an opposing party not arising out of the transaction or occurrence that is the subject matter of the opposing party’s claim.” Under earlier practice counterclaims and cross-claims were all lumped together as cross-bills. 3 Moore’s Federal Practice, Par. 13.34, p. 93 (2d Ed. 1948). However, Rules 13 and 14 of the Federal Rules of Civil Procedure distinguish between them. It is a well settled rule that a compulsory counterclaim need not have a ground for federal court jurisdiction independent of that of the main claim but that a permissive counterclaim must have such independent ground. 3 Ohlinger's Federal Practice, pp. 249, 250 ; 3 Moore’s Federal Practice, Par. 13.19, p. 53 (2d Ed. 1948). See Home Ins. Co. v. Trotter, 8 Cir., 1942, 130 F.2d 800. The theory of the rule is that a compulsory counterclaim is ancillary to the main claim while a permissive counterclaim is not. Since the test of a compulsory counterclaim is whether or not it arises “out of the transaction or occurrence” that is the subject matter of the main claim, it is evident that any claim which arises out of the transaction or occurrence that is the subject matter of the main claim is regarded by the courts as being ancillary to the main claim and will be supported for federal court jurisdictional purposes by federal court jurisdiction of the main claim. There are no compulsory cross-claims. Rule 13(g), like Rule 13(b), relating to permissive counterclaims, uses the word “may,” while Rule 13(a), relating to compulsory counterclaims, uses the word “shall.” Plowever, the fact that cross-claims are permissive in character does not prevent them from being ancillary to the main claim. If they “arise out of the transaction or occurrence that is the subject matter” of the main claim, they are supported for federal court jurisdictional purposes-by federal court jurisdiction of the main claim. Coastal Air Lines v. Dockery, 8 Cir., 1950, 180 F.2d 874, 877. See also Connecticut Indemnity Co. v. Lee, 1 Cir., 1948, 168 F.2d 420, and 3 Moore’s Federal Practice, Pars. 13.18 and 13.36, pp. 48, 97 (2d Ed.1948). There is not involved in the present case the last sentence of Rule 13(g) providing for cross-claims on claims against a co-party “whom it is asserted is or may be liable to the cross-claimant for all or part of a claim asserted in the action against the cross-claimant.” The Federal Declaratory Judgments Act being of fairly recent origin, there has been little judicial consideration as to what “transaction or occurrence” constitutes the “subject matter” of the claim of an insurer seeking a declaration of non-liability based upon fraud on the part of the insured. The words “occurrence,” ■“transaction,” and “subject matter” are words with flexible meanings. See Cyclopedia of Federal Procedure (3d Ed.1951) Sec. 16.11, p. 19. It would seem that their meaning as used therein cannot be satisfactorily determined in a semantic vacuum. It seems clear that as used therein the words have to do with the relationship between two or more claims. It is believed that such relationship should be determined by means of objective criteria. It would seem that the nature and character of the claims asserted and the proof in support of such claims would constitute objective criteria. Declaratory relief is sui generis. United States Fidelity & Guaranty Co. v. Koch, 3 Cir., 1939, 102 F.2d 288, 290. A proceeding for such relief is neither wholly a suit in equity nor an action at law. Home Ins. Co. v. Trotter, 8 Cir., 1942, 130 F.2d 800, 803. Issues may be presented which are cognizable either at law or in equity. Developments in the Law — Declaratory Judgments — 1941-1949, 62 Harvard Law Review 787, 835 (1949). An action for declaration of non-liability based on fraud in the procurement of the policy “presents a claim which might support either a legal defense to an action on the policy or an equitable bill to cancel the policy.” Ibid. See also, Piedmont Fire Ins. Co. v. Aaron, 4 Cir., 1943, 138 F.2d 732, certiorari denied, 1944, 321 U.S. 789, 64 S.Ct. 789, 88 L.Ed. 1079. In the present case the claims of the cross-claimants against the insured are actions at law in tort. The occurrence upon which their claims are based was the accident resulting from the alleged recklessness of the insured. The claim of the insurer is, in substance, an action in equity to cancel a contract ab initio. See Anderson, Declaratory Judgments, Sec. 323, p. 778 (1st Ed.1940). The transaction upon which that claim is based was the transaction between the insurer and the insured which resulted in the claimed fraudulent procurement of the insurance contract. The proof of the parties on the declaratory claim would not be connected with or related to the proof of the parties in connection with their cross-claims. The evidence in the former will relate to the transaction whereby the insured allegedly fraudulently procured the execution of the insurance contract. The evidence in the latter will relate to the occurrence of the automobile mishap, and the injuries sustained -by the cross-claimants as a result thereof. It is difficult to see how the claims could be regarded as arising out of the same occurrence or transaction when the evidence as to the one would have no factual relation to the evidence in the other. It would seem that on the basis of objective criteria the claims of the cross-claimants against Wayne R. Fox cannot be considered as having arisen out of the subject matter of the original declaratory claim. In Cyclopedia of Federal Procedure (3d Ed.1951) Sec. 16.11, p. 20, the following statement appears: “With further reference to the meaning of ‘transaction or occurrence’ as used in Rule 13(a), it has been said that the terms include the facts and circumstances out of which a claim may arise, and whether two claims arise out of the same transaction or occurrence depends in part on whether the same evidence would support or refute both.” In the case of United States Fidelity & Guaranty Co. v. Koch, 3 Cir., 1939, 102 F.2d 288, at page 293, in which the court had under consideration a problem under the Federal Declaratory Judgments Act not involved in the present case, the following' appears: “ ‘The liability under the policy and the liability for negligence are indeed two separate transactions. * * ■ * ’ Borchard, Declaratory Judgments and Insurance Litigation, above cited, 15.” See also Associated Indemnity Corporation v. Davis, D.C.Pa.1942, 45 F.Supp. 118, 121. Some of the cases having to do with federal court jurisdiction of cross-claims will next be considered. In the case of Collier v. Harvey, 10 Cir., 1949, 179 F.2d 664, it was held by a divided court that ancillary federal court jurisdiction existed as to a declaratory cross-claim brought by the insured against the injured person. The cross-claim in that case was strictly declaratory in nature and was closely related factually to the insurer’s declaratory claim. The insurer in that case did not seek to avoid the policy ab initio. In the case of United States Fidelity & Guaranty Co. v. Janich, D.C.Cal.1943, 3 F.R.D. 16, in a situation similar to that in' the present case, the court held that federal court jurisdiction existed as to similar cross-claims. There was limited discussion of the jurisdictional question. The basis of the court’s ruling was the following, at page 19 of 3 F.R.D. : “A similar question of jurisdiction was examined by this court in Golconda Petroleum Corp. v. Petrol Corporation [D.C.], 46 F.Supp. 23, 25. ‘Jurisdiction of the federal courts depends upon the state of the record at the time the action was brought and having obtained jurisdiction, it cannot be ousted.’ See also Southern Pacific Co. v. Haight, 9 Cir., 126 F.2d 900.” The cases referred to by the court did not involve the question of jurisdiction as to cross-claims. In the recent case of Pettyjohn v. Pettyjohn, 1951, 192 F.2d 322, the United States Court of Appeals for the Eighth Circuit had before it a situation where the matter of federal court jurisdiction of cross-claims was directly involved. The United States had brought two actions under the provisions of 26 U.S.C.A. § 3678 to enforce liens for taxes against certain real and personal property joining as parties defendant different claimants to the property. Some of the claimants as between themselves made conflicting claims to the property which they asserted by means of cross-claims. The claimants were all citizens of the same state. A decree was entered in favor of the United States imposing liens upon the real property involved. The trial court then proceeded to try out the conflicting claims of the claimants as to the property as to which the United States had asserted liens. On appeal the trial court was directed to dismiss the cross-claims for want of jurisdiction. The Court of Appeals held that the grant by Congress to federal courts of jurisdiction of actions by the United States to enforce tax liens did not carry with it jurisdiction of cross-claims between co-citizen rival claimants to the property as to which the United States asserted liens. The Court stated at page 326 of 192 F.2d: “We can not suppose that by the provisions of section 3678 Congress intended to confer on Federal district courts a jurisdiction over controversies wholly between citizens of the same State, a jurisdiction which the Constitution, Article 3, Section 2, by failing to grant to the courts of the United States has denied.” The Court further stated at page 326 of 192 F.2d: “Nor is there any merit in appellants’ suggestion that jurisdiction of the District Court may be found in Rule 13(g) of the Rules of Civil Procedure, 28 U.S.C. The Rules of Civil Procedure are wholly procedural and neither extend nor limit the established jurisdiction of the district courts. Rule 82; Coastal Air Lines, Inc., v. Dockery, 8 Cir., 180 F.2d 874, 877; Hagan v. Central Avenue Dairy Inc., 9 Cir., 180 F.2d 502, 17 A.L.R.2d 735.” It seems, therefore, that the fact that a federal court has jurisdiction of the subject matter of an action and of the persons who are proper defendants to such action does not of itself extend jurisdiction to cross-claims, and this even though the cross-claims do have a general relevancy to the subject matter of the main action. It seems further, that in order for such cross-claims to come within the ancillary jurisdiction of a federal court they must have a particular relation to the subject matter of the main action, and that the requisite relation exists only when such cross-claims “arise out of the transaction or occurrence that is the-subject matter” of the main action. As heretofore noted, the cross-claims of the defendants Joe Zieons and Ralph Eakins against the defendant Wayne R. Fox cannot be considered as having arisen out of the transaction or occurrence which is the subject matter of the original declaratory claim. Therefore, federal jurisdiction as to their cross-claims cannot be supported by federal court jurisdiction of the original declaratory claim. It is the holding of the Court that federal court jurisdiction is lacking as to the cross-claims of the defendants Joe Zieons and Ralph Eakins against the defendant Wayne R. Fox. The real storm center of this litigation at this stage has to do- with questions arising under the Iowa Motor Vehicle Financial and Safety Responsibility Act. Chapter 321A, Code of Iowa 1950, I.C.A. Unless otherwise indicated, all references to the Iowa Code are to the Iowa Code of 1950, I.C.A. Under the provisions of that Act the Commissioner of Public Safety has authority to administer it and enforce the provisions thereof. Pearl McMurry, Commissioner of Public Safety of Iowa, made application to intervene and file answer to the plaintiff’s complaint. His application was granted and he filed his answer herein. It is his claim that certain questions presented in this case are of importance in connection with the administration and enforcement of the provisions of the Act. It is his claim, and the claim of the defendants Joe Zieons and Ralph Eakins, that by reason of certain provisions in the Act the plaintiff, Hoosier Casualty Company, cannot now avoid the policy in question. Such claim requires a consideration of the provisions of that Act. The Act was passed in 1947, and appears as Chapter 172 of the Acts of the 52d General Assembly. It follows the model bill sponsored and recommended.by the National Committee on Uniform Traffic Laws and Ordinances, which ■model- bill has been endorsed by the National Conference of Commissioners on Uniform State Laws and by the Council on State Government. For a thorough discussion of the history, objectives, and provisions of the Act, see Note 33 Iowa Law Review 522-38 (1948). The Act was divided into six portions by the Legislature. The headings given to each portion aix as' follows: “Words and Phrases Defined”, “Administration of Act”, “Security Following Accident”, “Proof of Financial Responsibility for the Future”, “Violation of Provisions of Act — Penalties”, and “General Provisions.” The distinction between the security and proof sections is very important, and it is significant that the Legislature very -carefully separated those two sections. In 33 Iowa Law Review 522, 527 (1948), it is stated: “An appreciation of the distinction between security and proof oí financial responsibility is basic to an understanding of the Iowa or similar acts. Security, i. e., the furnishing of collateral of one type or another to cover liability of the person secured for damages in the accident which brought the law into play, is retrospective in operation. Proof of financial responsibility, * * * is prospective in operaT tion and refers to evidence of ability to meet possible judgments arising out of the future ownership, maintenance, or operation of motor vehicles.” The Security Provisions. -Code of Iowa, • Sec. 321A.5(1) provides that: “The commissioner shall, immediately or within sixty (60) days after the receipt of a report of a motor-vehicle accident within this state which has resulted in bodily injury or death or damage to the property of any one person in excess of fifty dollars ($50), suspend the license of each operator and all registrations of each owner of a motor vehicle in any manner involved in such accident, * * * unless such operator or owner of both shall deposit security in a sum which shall be sufficient in the judgment of the commissioner to satisfy any judgment or judgments for damages resulting from such accident as may be recovered against such operator or owner * * *Sec. 321A.5(2) provides that the security requirement “shall not apply” to owners or operators with respect to whom an “automobile liability policy” was in effect at the time of the accident. The policy, to entitle the insured to exemption from the security provision of the Act, must have maximum coverage limitations of not less than $5,000 for bodily injury or death of one person, $10,000 for bodily injury or death'of two or more persons, and $1,000 for property damage. The final paragraph of Sec. 321A.5(3) provides: “Upon receipt of notice of such accident, the insurance carrier or surety carrier which issued such policy or bond shall furnish for filing with the commissioner a written notice that such policy or bond was in effect at the time of such accident.” This written notice of policy in effect is made in Iowa on a form designated as an “SR 21”, and it is the effect of filing such a notice on the insurance carrier’s right to avoid the policy which is the issue the Commissioner raises in his answer. It appears that the “SR” is an abbreviation for Safety Responsibility. The Proof Provisions. With certain exceptions not material here, the Commissioner must suspend the license and registration of any person who fails within sixty days to satisfy a judgment arising out of a motor vehicle accident. Secs. 321 A. 12, 321A.13, Code of Iowa. Such suspension continues until the judgment is paid (as defined in Sec. 321A.15) and until the person furnishes proof of future financial responsibility. Sec. 321A.14, Code of Iowa. Such proof is also required prior to the reinstatement of a license suspended because the person has been convicted of certain crimes. Sec. 321A.17, Code of Iowa. Proof of future responsibility can be made by an insurance carrier’s filing a “certificate” certifying that there is in effect a “motor-vehicle liability policy” for the benefit of the person required to furnish proof. Secs. 321A.18, 321A.19, Code of Iowa. If proof is made in this manner, the insurance must be a “motor-vehicle liability policy” as defined in Sec. 321A.21, Code of Iowa. That Section points out certain provisions such a policy must contain, and makes it subject to certain provisions whether expressed or not, the first of which reads as follows: “The liability of the insurance carrier with respect to the insurance required by this chapter shall become absolute whenever injury or damage covered by said motor-vehicle liability policy occurs; said policy may not be canceled or annulled as to such liability by any agreement between the insurance -carrier and the insured after the occurrence of the injury or damage; no statement made by the insured or on his behalf and no violation of said policy shall defeat or void said policy.” Sec. 321A.21(6) (a), Code of Iowa. Except by substitution of another such policy, a certified motor vehicle liability policy cannot be canceled by an insurance carrier unless it has given 10 days’ notice of the same to the Commissioner. Sec. 321A.22, Code of Iowa. On June 19, 1950, the plaintiff issued the policy in question in the present case to Wayne R. Fox. Paragraph E, on page 3, of the policy provides as follows: “Such insurance as is afforded by this policy for bodily injury liability or property damage liability shall comply with the provisions of the motor vehicle financial responsibility law of any state or province which shall be applicable with respect to any such liability arising out of the ownership, maintenance or use of the automobile during the policy period, to the extent of the coverage and limits of liability required by such law, but in no event in excess of the limits of liability stated in this policy. The insured agrees to reimburse the company for any payment made by the company which it would not have been obligated to make under the terms of this policy except for the agreement contained in this paragraph.” On January 28, 1951, the afore-mentioned accident occurred, in which Joe Zieons and Ralph Eakins were injured, and which resulted in the death of Gerald E. Kriegel. Bodily injuries having been sustained in the crash, Wayne R. Fox either had to post security or show exemption from the security requirements of the Act in order to escape having his operator’s license and motor vehicle registration suspended. On February 5, 1951, plaintiff’s representative, William Quinn, filled in an “SR 21” form, describing the date and place of- the accident and the vehicle involved. The writing inserted in the form states that the vehicle was operated and owned by Wayne R. Fox. The policy number, Wayne R. Fox’ name and address, and “x” marks opposite the words “Yes” were then filled into blanks on the form, making it read as follows: “The company signatory hereto gives Notice that its policy numbered......4852......... issued to.........Wayne R. Fox,........ Name Eddyville, Iowa......is a liability policy as Address defined in the Iowa Motor Vehicle Financial and Safety Responsibility Act affording limits of $5,000-$10,000 bodily injury and $1,000 property damage, which policy was in effect on the date of the above described accident. “Does this policy apply to the above owner? “Does this policy apply to the above operator ? “Yes (x) No ( )” The form is signed for the Hoosier Casualty Company by William Quinn. The form was filed on February 6, 1951, with the Department of Public Safety of Iowa. On September 21, 1951, plaintiff filed herein its suit for a declaration of non-liability under the policy based upon the alleged fraud of Wayne R..Fox in its procurement. The fraud -charged is that Wayne R. Fox falsely represented that no automobile policy issued to him had ever been canceled and that his operator’s license had never been revoked. The Commissioner challénges the present right of ' the plaintiff to avoid the policy. The Commissioner contends that the plaintiff has foreclosed litigation on this point by filing the “SR 21” form and failing to withdraw it within 50 days after the accident. Pie asks that “the Court declare that it is the legal effect of the provisions of section 321A.5, Code of Iowa 1950, I.C.A., that a certification that the owner and/or operator of a motor vehicle involved in an accident is exempt from the requirement of the deposit of security under the provisions of sub-paragraph a of paragraph 2 of said section, cannot be repudiated or denied after such representation and certification has become operative, to preserve motor vehicle driving and registration privileges, and that an insurer so certifying cannot thereáfter deny- that liability exists against such insurer' under the policy so certified.” In support of this request he cites two rules adopted by the Iowa Department of Public Safety on August 4, 1949. These rules provide: “1. An SR-21 Form filing once made may not be withdrawn by an insurance carrier after the 50th day following the accident for which it is filed; * * * ” (a proviso which has recently been added to Rule’ 1, having to do with filings after the 50 day period, is conceded to have nothing to do with this case). “2. It shall be the responsibility of each insurance carrier to check all copies of SR-21 Forms returned to it by the department, arid if .the signature appearing on a-particular SR-21 Form is not that of a person authorized to sign such form on behalf of the insurance carrier designated as signatory thereon, or if such insurance carrier desires to withdraw or reject such SR-21 form filing, such insurance carrier shall promptly notify the department to that effect.” It will be noted that Sec. 321A.5, requiring the Commissioner to suspend the license or registration of persons involved in an accident of the type designated therein “immediately .or within sixty (60) days” after receipt of the report of an accident gives the Commissioner a limited discretion as to the time security or exemption must be shown. He has apparently selected 50 days as the time allowable. Thus an “SR 21” notice becomes effective to maintain operating or registration privileges after 50 days have passed following the accident. Reference to the “50 day period” hereafter will be to the period the Commissioner has decided upon for a showing of security or exemption. Reference to the “60 day period” will be to the time set for the Commissioner’s action under the statute. The Commissioner does not contend that the policy in question is a “required” policy as to which “The liability of the insurance carrier * * * shall become absolute” and as to which “no statement made by the insured or on his behalf and no violation of said policy shall defeat or void said policy”, as provided in Sec. 321A.21(6)(a), Code of Iowa. It is clear that it is not such a policy. The kind of policy referred to in Sec. 321A.21(6) (a) is a “motor-vehicle liability policy” which has been certified as proof of future financial responsibility. The words “motor-vehicle liability policy” are used in the Act as a term of art, having reference only to policies certified as proof under the proof section of the Act. This is to distinguish such a policy from the “automobile liability policy” which can exempt an operator or owner from furnishing security under Sec. 321A.5 of the Act. The policy in question was not a “motor-vehicle liability policy”, as the term is used in the Act. No allegation is made that Wayne R. Fox has ever had his license suspended for failure to satisfy a motor vehicle accident judgment. Some claim is made that his operator’s license has been suspended or revoked in the past because of criminal convictions, but it does not appear that the Commissioner has ever required him to furnish proof prior to reinstatement of his license. The proof provisions of the Act are not automatic. No one has to furnish proof until the Commissioner tells him he must do so if he wants his operator’s license or registration reinstated. Compare United States Casualty Co. v. Timmerman, 1935, 118 N.J.Eq. 563, 180 A. 629, and Rasinski v. Metropolitan Casualty Ins. Co., 1937, 117 N.J.L. 490, 189 A. 373, where New Jersey courts treat a motorist’s liability policy as being subject to the proof requirements of the New Jersey Act then in effect if the insured had previously had a $100 accident, whether or not the Commissioner had acted. The “SR 21” form filed by the plaintiff was not a certificate of proof of financial responsibility, but was rather a notice of policy in effect, as shown on its face, and as specified in Sec. 321A.5, dealing with the security requirements. Nor does Paragraph E on page 3 of the policy, quoted supra, transform the policy into a “proof” policy, which the insurer cannot avoid. It merely says that the policy shall comply with the provisions of the Act; and Sec. 321A.21(6) (a) of the Act does not purport to take away policy defenses as to any policies other than those certified as proof of future financial responsibility. Paragraph E does contemplate that the policy can be used as a “proof policy” if certified as such, for it gives the insurance company a right of indemnity against the insured for any payment made by the company which would not have been made except for the agreement contained in the paragraph. This is permitted under Sec. 321A.21(8), in the proof portion of the Act. Plaintiff cites a number of cases for the proposition that policy defenses can be raised or the policy avoided if the policy is not one certified as proof of financial responsibility: Farm Bureau Mutual Automobile Ins. Co. v. Hammer, 4 Cir., 1949, 177 F.2d 793, certiorari denied Beverage v. Farm Bureau Mut. Auto Ins. Co., 1950, 339 U.S. 914, 70 S.Ct. 575, 94 L.Ed. 1339; Sutton v. Hawkeye Casualty Co., 6 Cir., 1943, 138 F.2d 781, 786; Cohen v. Metropolitan Casualty Ins. Co. of N. Y., 1931, 233 App.Div. 340, 252 N.Y.S. 841; Rasinski v. Metropolitan Casualty Ins. Co., 1937, 117 N.J.L. 490, 189 A. 373; Anderson v. American Automobile Ins. Co., 1930, 50 R. I. 502, 149 A. 797; Hill v. Standard Mutual Casualty Co., 7 Cir., 1940, 110 F.2d 1001; Travelers Ins. Co. v. Boyd, 1949, 312 Ky. 527, 228 S.W.2d 421; State Farm Mut. Automobile Ins. Co. v. Arghyris, 1949, 189 Va. 913, 55 S.E.2d 16; and State Compensation Insurance Fund v. Bankers Indemnity Ins. Co., 9 Cir., 1939, 106 F.2d 368. To these cases can be added, State Auto Mut. Ins. Co. v. Sinclair, D.C.Ky.1950, 96 F. Supp. 267; American Mutual Liability Ins. Co. v. Ocean Accident Guarantee Corp., 1935, 87 N.H. 374, 180 A. 249; Brodsky v. Motorists Casualty Ins. Co., 1934, 112 N. J. L. 211, 170 A. 143; and McLaughlin v. Central Surety & Ins. Corp., 1933, 166 A. 621, 11 N.J.Misc. 440. Of the cases cited, only the cases of State Mut. Ins. Co. v. Sinclair, Farm Mutual Automobile Ins. Co. v. Hammer, and State Farm Mut. Automobile Ins. Co. v. Arghyris arose under statutes like Iowa’s, having both security and proof provisions. The -other cases cited were decided under earlier statutes, having proof provisions .only. However, the rule developed in the earlier c.ases to the effect that the Financial Responsibility Acts do not affect “voluntary” policies, not certified as proof, is still applied in the cases interpreting the new type Acts. The Commissioner cites some dictum in Travelers Ins. Co. v. Boyd, supra, which arose under the old type Act, to the effect that the new 1946 Kentucky Act, Acts 1946, c. 118, which is said to be like the Iowa Act, requires “proof of ability to respond in damages” immediately upon the happening of the accident, for that accident and for all future accidents. In State Auto Mut. Ins. Co. v. Sinclair, supra, a subsequent Federal case applying Kentucky law, the contention was rejected that the Act affects policies not certified as proof. The Court points out that the policy in question was not certified as proof of financial responsibility under the new Kentucky Act, and holds, after discussing the Boyd case, that the Act does not take away the insurance carrier’s right to avoid the policy. Such cases are not inconsistent with cases holding that policies issued under proof sections of Financial Responsibility Acts cannot be avoided. See Century Indemnity Co. v. Simon, D.C.N.J.1948, 77 F.Supp. 221; Montgomery v. Keystone Mut. Casualty Co., 1947, 357 Pa. 223, 53 A.2d 539; American Automobile Ins. Co. v. Penn. Mut. Indemnity Co., D.C.Pa.1946, 66 F.Supp. 15’9; Polonitz v. Wasilindra, 1944, 155 Pa.Super. 62, 32 A.2d 136; Sky v. Keystone Mut. Casualty Co., 1942, 150 Pa.Super. 613, 29 A.2d 230. Defenses as to coverage have been allowed in some cases even as to “proof